OECD: South-East Asian innovation should look to China

[BRUSSELS] South-East Asian countries need to embrace the science and innovation that will allow them to reach the next stage of development and be globally competitive and must closely follow China's progress, according to a forthcoming OECD (Organisation for Economic Co-operation and Development) report.

China which has overtaken Japan as the centre of the region's trade offers development opportunities for other nations, but also risks leaving some countries' economies locked into low-skill, labour-intensive work, according to Gernot Hutschenreiter of the OECD's Directorate for Science, Technology and Industry.

He presented the preliminary version of the OECD's first regional innovation report, 'Innovation in Southeast Asia', due to be published in the next few weeks, at the ASEAN-EU Year of Science, Technology and Innovation 2012 closing event in Brussels last week (11-12 December).

South-East Asia has generally seen a move away from labour-intensive, low-tech production towards more technologically advanced manufacturing, Hutschenreiter said.

He told SciDev.Net that the report's take-home message is that the general economic environment in South-East Asia is changing rapidly, which has implications for innovation and that China will play a key role in the region's development.

Hutschenreiter said that China is heavily investing in both research and development and in skills and knowledge, and is now slowly starting to produce its own industrial components, whereas it used to import them.

This improvement in its advanced manufacturing capabilities means that China in increasing competition with other countries in the region, especially middle-income nations such as Indonesia, Malaysia and Thailand, he added.

South-East Asian countries would be in a better position to profit from interacting with a rising China if they were to increase their innovation capacity, including putting more effort into research and development.

But there are various hurdles to this goal, he explained, including often limited investment in science and technology, a lack of indigenous innovation capability and poor policies to support innovation and infrastructure.

Countries in the region can gain from helping each other to fill these gaps, Hutschenreiter said.

China's continuing rise is having a different effect on individual countries in the region, depending on their stage of development, he said.

The least-developed countries can do well from exploiting natural resources and non-technological innovation, he said, but to avoid being locked into low-skilled, low-profit economies they should actively prepare the next step in their development, which is higher-value production.

Middle-income countries already have some technological innovation, including in high-tech sectors, but this is largely within multinational and government enterprises, he said. It is especially important for such countries to create spill-over effects to other parts of their economies, including local suppliers.

They have mastered the industrial processes in some areas, such as the electronics industry, but China is moving fast, so they need to create for themselves the innovation capacity to move on as well and find appropriate niches, Hutschenreiter said.

More could be done in this field, starting with creating conditions that encourage innovative firms, and doing more to support research, which is important for boosting innovation, he said. Investment in RD is still, in many countries, very poor even for their current level of income.

For the most advanced countries in the region, there is an increased need for RD to foster excellence in science, technology and education, and to provide access to cutting-edge knowledge through local centres of excellence and international collaboration, he said.

Madinah Binti Mohamad, secretary-general for Malaysia's science minister, said the report was based on existing national data, so its findings were unsurprising to her. She added that Malaysia, at least, has come a long way since the surveys on which the report is based were done in 2010 and so the report may already be somewhat out of date.

But the surveys have already been adapted with minimal changes for use by the Philippine government, according to Fortunato T. Dela Pea, undersecretary of science and technology services at the country's Department of Science and Technology, who welcomed the report.